Traders still expect November consumer prices to hold or rise

The contract sits 16 points below its seven-day high of 94%, with 77 days to resolution.

In one line: November consumer prices will hold or rise; the contract paying on any reading above -0.1% is too cheap at 78% and should trade above 85% by 9 October.

Traders on Kalshi cut the odds that November consumer prices rise by more than -0.1% from 94% on 17 September to a low of 75% on 23 September, then lifted them 3 points in the last 24 hours to 78%. The contract pays Yes on any monthly Consumer Price Index (CPI) reading of 0.0% or higher, rounded to one decimal, and resolves on 10 December.

Over the 7 days the contract lost 16 points. Its sibling in the same event, which pays on a November rise of more than 0.1%, trades at 69%. Read as a ladder, the two strikes say traders put 69% on a rise above 0.1%. The 9-point gap between them implies roughly 9% on a reading of 0.0% or 0.1%, and the No side of this contract, a fall to -0.1% or below, takes the rest.

That shape is hard to defend. On the assumption that monthly price readings bunch together, a distribution that assigns little probability to 0.0% and 0.1% but more to an outright monthly fall has November either rising more than 0.1% or falling to -0.1% or below. An outright monthly fall usually needs a steep drop in petrol prices. On 23 September, the day this contract hit its low, USO, the oil fund, rose 1.41%, and TLT, the long-Treasury fund, fell 1.25%. Neither move points to the steep petrol drop an outright fall would need.

The more probable error is the week's slide in this contract, not the 69% on the upper strike, and the 3-point bounce in the last 24 hours is consistent with a partial reversal. The call: at 78%, the market underprices a November reading of 0.0% or higher, and the contract will trade above 85% by 9 October.